B-161208, AUG. 8, 1967

B-161208: Aug 8, 1967

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CANCELLATION OF AN INVITATION WHICH PERMITTED SUBMISSION OF UNBALANCED BIDS AS RESULT OF ERRONEOUS WEIGHT FACTORS AND WHICH MIGHT NOT RESULT IN AN AWARD TO THE LOW BIDDER AT LOWEST COST TO GOVERNMENT IS CANCELLATION MEETING "COGENT" REASON JUSTIFYING CANCELLATION. IN THIS CASE ALTHOUGH REASONS GIVEN FOR CANCELLATION WERE ERRONEOUS AND RESULT OF POOR JUDGMENT. WITH RESPECT TO SECOND INVITATION ALTHOUGH ERRONEOUS WEIGHT FACTORS FOR EVALUATION WERE NOT COMPLETELY CORRECTED. PROPOSED AWARD WILL RESULT IN LOWEST OVERALL COST TO GOVERNMENT. PROFESSIONAL CARPET SERVICE: FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 3. UNDER BOTH IFB'S ARE THE SUBJECT OF THE PROTEST HERE INVOLVED. THE SERVICES CALLED FOR UNDER GROUP B ARE THE REPAIR.

B-161208, AUG. 8, 1967

BIDS - REJECTION AND READVERTISEMENT - JUSTIFICATION DECISION CONCERNING PROTEST OF PROFESSIONAL CARPET SERVICE AGAINST GSA ACTION IN CANCELLING INVITATION FOR REPAIR AND INSTALLATION OF RUGS. CANCELLATION OF AN INVITATION WHICH PERMITTED SUBMISSION OF UNBALANCED BIDS AS RESULT OF ERRONEOUS WEIGHT FACTORS AND WHICH MIGHT NOT RESULT IN AN AWARD TO THE LOW BIDDER AT LOWEST COST TO GOVERNMENT IS CANCELLATION MEETING "COGENT" REASON JUSTIFYING CANCELLATION. IN THIS CASE ALTHOUGH REASONS GIVEN FOR CANCELLATION WERE ERRONEOUS AND RESULT OF POOR JUDGMENT, VALID BASIS DID EXIST FOR CANCELLATION. WITH RESPECT TO SECOND INVITATION ALTHOUGH ERRONEOUS WEIGHT FACTORS FOR EVALUATION WERE NOT COMPLETELY CORRECTED, PROPOSED AWARD WILL RESULT IN LOWEST OVERALL COST TO GOVERNMENT. PROTEST REVEALS NECESSITY FOR MORE ACCURACY IN DRAFTING SPECIFICATIONS.

TO MRS. JOAN ESTRADA, PROFESSIONAL CARPET SERVICE:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 3, 1967, AND SUPPLEMENTAL CORRESPONDENCE, PROTESTING AGAINST CANCELLATION OF INVITATION FOR BIDS (IFB) NO. WA-NI-R-1754-12-5-66, AND ANY AWARD OF A CONTRACT UNDER THE READVERTISEMENT, IFB NO. WA-NI-RR-1754-2-15-67, BY THE GENERAL SERVICES ADMINISTRATION (GSA).

GROUP B, ITEMS 9-25, AREAS 1 AND 2, UNDER BOTH IFB'S ARE THE SUBJECT OF THE PROTEST HERE INVOLVED. THE SERVICES CALLED FOR UNDER GROUP B ARE THE REPAIR, ALTERATION, AND INSTALLATION OF RUGS, CARPETS AND CARPET UNDERLAYMENTS, FURNISHED BY THE GOVERNMENT, FOR ALL AGENCIES WITHIN THE DESIGNATED AREAS, WITH CERTAIN STATED EXCEPTIONS, LIMITATIONS AND OPTIONS. THE INVITATIONS PROVIDE THAT AWARD WILL BE MADE IN THE AGGREGATE FOR ALL SERVICES IN EACH OF THE GEOGRAPHIC AREAS, AND THAT THE LOW AGGREGATE BID FOR EACH AREA WILL BE THE SUM OF THE ITEMS DETERMINED BY MULTIPLYING THE ITEM UNIT PRICE BY THE STATED WEIGHT FACTOR FOR SUCH ITEM.

THE FIRST INVITATION WAS ISSUED ON NOVEMBER 14, 1966, AND BIDS WERE OPENED ON DECEMBER 7, 1966. YOUR BID WAS LOW FOR BOTH AREAS 1 AND 2 IN GROUP B. ON THE DATE OF OPENING ONE OF THE OTHER BIDDERS, ARCADE SUNSHINE, PROTESTED ANY AWARD TO YOUR FIRM, ALLEGING THAT YOU HAD SUBMITTED AN UNBALANCED BID. ARCADE CITED ITEMS 9, 10, 11 AND 16, 20, AND 24, AS THE ITEMS INVOLVED. THE INVITATION WAS SUBSEQUENTLY CANCELLED. HOWEVER, AS WILL BE DISCUSSED HEREINAFTER, THE REASONS GIVEN BY CONTRACTING PERSONNEL FOR CANCELLING DO NOT APPEAR TO HAVE BEEN BASED ON ARCADE'S ALLEGATIONS.

THE SECOND INVITATION WAS ISSUED ON JANUARY 31, 1967, AND THE FIVE BIDS RECEIVED IN RESPONSE THERETO WERE OPENED ON FEBRUARY 15, 1967. CERTAIN MODIFICATIONS WERE MADE IN THE READVERTISEMENT, INCLUDING A PROVISION GIVING GOVERNMENT AGENCIES THE OPTION OF USING THE SERVICES EITHER UNDER THE CONTRACT TO BE AWARDED PURSUANT TO THE SUBJECT IFB OR UNDER APPLICABLE FEDERAL SUPPLY SCHEDULE CONTRACTS. IN ADDITION, SOME OF THE WEIGHT FACTORS IN AREAS 1 AND 2 WERE CHANGED. RAY'S CARPET INSTALLATION AND CLEANING COMPANY, INCORPORATED, AND ARCADE SUNSHINE, WERE THE RESPECTIVE LOW BIDDERS FOR AREAS 1 AND 2. AN AWARD WAS MADE TO RAY'S ON FEBRUARY 28. ARCADE WAS DECLARED NONRESPONSIBLE AFTER THE SMALL BUSINESS ADMINISTRATION DENIED IT A CERTIFICATE OF COMPETENCY. ARLINGTON RUG CLEANERS IS THE SECOND LOW BIDDER FOR AREA 2. HOWEVER, NO AWARD HAS BEEN MADE PENDING OUR DECISION ON YOUR PROTEST.

WITH RESPECT TO CANCELLATION OF THE FIRST INVITATION, YOU CONTEND THAT NO VALID REASONS WERE GIVEN FOR SUCH ACTION, ALTHOUGH YOU APPARENTLY FEEL THAT IT WAS DEFECTIVE IN SEVERAL RESPECTS AND THAT SUCH DEFECTS WERE NOT CORRECTED IN THE READVERTISEMENT. YOU REPORT THAT YOU WERE FIRST ADVISED THAT THE IFB WAS BEING CANCELLED BECAUSE (1) THE ITEM FOR MEASURING ON WEEKENDS SHOULD BE STRICKEN AS NO MEASURING WAS ACTUALLY DONE ON WEEKENDS, (2) THERE WAS AN EXISTING CONTRACT ON MEASURING, AND (3) THE AGENCIES WOULD DO THEIR OWN MEASURING. YOU TOOK ISSUE WITH EACH OF THESE REASONS AND STATED YOUR POSITION IN A LETTER TRANSMITTING YOUR "TOKEN" BID UNDER THE SECOND IFB. YOU WERE ADVISED THAT THE FOREGOING REASONS WERE NOT THE REAL REASONS FOR CANCELLATION. THE REASONS STATED IN GSA'S LETTER OF FEBRUARY 27 TO YOU ARE THAT THE OPTION CLAUSE REFERRED TO ABOVE WAS OMITTED AND THERE WAS AN ERROR UNDER GROUP A IN SPECIFYING "INCLUDING MOTH PROOFING" WHEN IT SHOULD HAVE READ "EXCLUDING MOTH PROOFING.' AFTER TAKING ISSUE WITH THESE REASONS, YOU WERE ADVISED THAT THE BASIS FOR CANCELLATION WAS YOUR UNBALANCED BIDDING AND INCORRECT WEIGHT FACTORS. YOU DO NOT APPEAR TO DISPUTE THESE REASONS, BUT ARGUE THAT IF THEY JUSTIFIED CANCELLATION THEN THE SAME REASONING SHOULD BE APPLIED TO THE SECOND IFB.

SOME OF THE SPECIFIC OBJECTIONS TO THE IFBS ARE THAT REPAIR ITEMS SHOULD BE MORE HEAVILY WEIGHTED; THAT PLANT REPAIR ITEMS SHOULD BE INCLUDED IN GROUP A; THAT THE SERVICES CALLED FOR BY ITEMS 13/A), 17/A), AND 21/A) ARE OBSOLETE AND SHOULD BE DELETED; THAT MORE WEIGHT SHOULD BE GIVEN TO WORK PERFORMED OUTSIDE THE 8:30 - 5:00 PERIOD; THAT OPTIONAL ITEM 26 IN THE SECOND IFB CALLING FOR MEASURING SERVICES SHOULD BE DELETED AS IT SHOULD BE INCLUDED IN INSTALLATION CHARGES; AND THAT THE MINIMUM CHARGE SHOULD BE REDUCED FROM $25 TO $5.

ALTHOUGH GSA CONCEDES THAT THE REASONS STATED FOR CANCELLING THE FIRST IFB WERE PERHAPS ERRONEOUS AND THE RESULT OF POOR JUDGMENT ON THE PART OF THE CONTRACTING OFFICER, THE ARGUMENT IS MADE THAT A VALID BASIS DID EXIST TO JUSTIFY THE CANCELLATION. THE JUSTIFICATION IS SAID TO BE THE ERRONEOUS WEIGHT FACTORS, WHICH WERE DISCOVERED AS A RESULT OF YOUR UNBALANCED PRICING OF SEVERAL ITEMS. WHILE GSA DOES NOT FEEL THE UNBALANCING INVOLVING THE ITEMS FOR MEASURING WOULD HAVE BEEN SUFFICIENT TO JUSTIFY CANCELLATION, THEIR POSITION WITH RESPECT TO OTHER ITEMS IS QUITE DIFFERENT AS INDICATED BY THE FOLLOWING LANGUAGE FROM THE ADMINISTRATIVE REPORT:

"THE ITEMS COVERING FURNISHING AND INSTALLATION OF BINDER BARS, TAKING UP OF CARPETING AND INSTALLATION BY THE TACK METHOD, ON THE OTHER HAND, PRESENTED QUITE A DIFFERENT PROBLEM. THE FIRST TWO OF THESE SERVICES ARE NOT CUSTOMARILY FURNISHED WITHOUT CHARGE BY THE INDUSTRY AND AS YOU WILL SEE FROM THE ABSTRACT OF BIDS NO BIDDER OTHER THAN PROFESSIONAL OFFERED THESE ITEMS WITHOUT CHARGE. PROFESSIONAL ITSELF HAD NEVER OFFERED THESE ITEMS WITHOUT CHARGE IN BIDS WHICH IT HAD SUBMITTED UNDER PREVIOUS INVITATIONS. IN ADDITION, THE ACTUAL COSTS OF INSTALLING CARPETING BY THE TACK METHOD IS GENERALLY CONSIDERED TO BE ONLY SLIGHTLY LESS THAN THE COST OF INSTALLING BY THE TACKLESS METHOD AND THIS FACTOR RENDERED THE PROFESSIONAL BID ON INSTALLATION BY THE TACK METHOD SOMEWHAT SUSPECT.

"THE MERE FACT, HOWEVER, THAT THE BID WAS UNBALANCED, STANDING ALONE, WOULD NOT HAVE REQUIRED THE CANCELLATION OF THE INVITATION SINCE, IF THE WEIGHT FACTORS HAD BEEN CORRECT, THE PROFESSIONAL BID WOULD HAVE TRULY PROVIDED THE LOWEST OVERALL COST TO THE GOVERNMENT AND ITS ACCEPTANCE WOULD NOT HAVE BEEN PREJUDICIAL TO OTHER BIDDERS. UNFORTUNATELY, OUR EXPERIENCE HAS INDICATED THAT BIDS ARE NOT NORMALLY UNBALANCED UNLESS THE WEIGHT FACTORS ARE IN ERROR. THE ADVANTAGE TO BE GAINED BY A BIDDER FROM UNBALANCING IS OBTAINED BY BIDDING HIGH ON ITEMS WHICH CARRY WEIGHTS WHICH ARE LOWER THAN THEY SHOULD BE AND LOW ON ITEMS WHICH HAVE WEIGHTS WHICH ARE HIGHER THAN THEY SHOULD BE. OUR EXAMINATION AND RE-EVALUATION OF THE WEIGHT FACTORS ON THIS INVITATION SHOWED SEVERAL INSTANCES IN WHICH PROFESSIONAL MADE USE OF THIS TECHNIQUE. FOR EXAMPLE, A WEIGHT FACTOR OF 18 WAS ASSIGNED IN THE INVITATION TO ITEMS 17 AND 18A ON WHICH PROFESSIONAL BID "NO CHARGE" AND ?50 RESPECTIVELY. OUR RE-EVALUATION SHOWED THAT THE CORRECT WEIGHT SHOULD HAVE BEEN LESS THAN 1. SIMILARLY, A WEIGHT FACTOR OF 7 WAS ASSIGNED TO ITEMS 21 AND 22A ON WHICH PROFESSIONAL BID "NO CHARGE" AND ?50 RESPECTIVELY AND WHICH SHOULD ALSO HAVE CARRIED A WEIGHT FACTOR OF LESS THAN 1.'

BECAUSE OF THE ERRONEOUS WEIGHT FACTORS AND THE UNBALANCED BID, GSA IS OF THE OPINION THAT THE OTHER BIDDERS MAY HAVE BEEN PREJUDICED WITH NO ASSURANCE THAT THE OVERALL COST OF A CONTRACT AWARDED TO YOU WOULD BE THE LOWEST AS IT WAS WHEN EVALUATED IN ACCORDANCE WITH THE "METHOD OF AWARD" CLAUSE OF THE IFB.

AS A RESULT OF YOUR ALLEGATIONS CONCERNING THE WEIGHT FACTORS IN THE SECOND IFB, GSA REEXAMINED THEM AND CONCLUDED THAT THEY DID NOT ACCURATELY REFLECT THE POTENTIAL REQUIREMENTS FOR THE ITEMS INVOLVED. THEREFORE, THEY WERE REVISED CONSIDERABLY, PARTICULARLY IN THE AREAS CALLING FOR SERVICES TO BE RENDERED OUTSIDE OF THE AGENCIES' REGULAR WORKING HOURS. AFTER THE REVISIONS, GSA REEVALUATED THE BIDS TO DETERMINE WHAT EFFECT THE REVISIONS HAD ON THEIR INITIAL EVALUATION,AND CONCLUDED AS FOLLOWS:

"LOOKING FIRST AT SERVICE AREA 1, YOU WILL OBSERVE THAT THE INACCURACIES IN THE WEIGHTS ARE NOT NEARLY SO PRONOUNCED AS THOSE WHICH WERE FOUND IN THE FIRST INVITATION. IN ADDITION, WHILE RAY'S BID SHOWS SOME ELEMENTS OF UNBALANCING, PARTICULARLY IN ITEM 23, THESE ARE OF A FAR LOWER ORDER OF MAGNITUDE THAN THOSE WHICH APPEARED IN THE PROFESSIONAL BID. WHEN RAY'S BID WAS RE-EVALUATED ON THE BASIS OF THE CORRECTED WEIGHTS IT REMAINED LOW. ON THE BASIS OF OUR BEST AVAILABLE ESTIMATE, THEREFORE, RAY'S DID NOT OBTAIN ANY UNFAIR COMPETITIVE ADVANTAGE OVER OTHER BIDDERS AND THE CONTRACT WHICH WAS AWARDED WILL PROVIDE THE GOVERNMENT WITH THE REQUIRED SERVICES AT THE LOWEST OVERALL COST. THE CONTRACTOR IS CURRENTLY PERFORMING SATISFACTORILY UNDER THE CONTRACT. UNDER THE CIRCUMSTANCES WE ARE OF THE OPINION THAT THE GOVERNMENT'S BEST INTERESTS WOULD NOT BE SERVED BY CANCELLATION OF THE AWARD AND WE RECOMMEND THAT THE PROTEST BE DENIED AS TO SERVICE AREA 1. B-158126, MARCH 10, 1966.

"SERVICE AREA 2 PRESENTS A SOMEWHAT DIFFERENT PROBLEM. IN THIS AREA, THE WEIGHTS WERE MARKEDLY CHANGED AS A RESULT OF THE RE EVALUATION. THIS CHANGE IS PARTICULARLY PRONOUNCED IN ITEMS 13B, 13C, 17B AND 21B. HOWEVER, THE BID OF THE LOW RESPONSIBLE BIDDER, ARLINGTON RUG CLEANERS IS NOT IN ANY RESPECT UNBALANCED, AND WE ARE CONVINCED THAT IT IS A BONA FIDE BID NOT DESIGNED TO TAKE ADVANTAGE OF THE ERRORS IN THE ASSIGNED WEIGHTS. WE HAVE RE-EVALUATED THE ARLINGTON BID ON THE BASIS OF THE REVISED WEIGHTS AND HAVE FOUND THAT IT REMAINS LOW.

"WE SERIOUSLY QUESTION THE WISDOM, UNDER THESE CIRCUMSTANCES, OF CANCELLING THE INVITATION FOR BIDS AS TO SERVICE AREA 2. WHILE AS A TECHNICAL MATTER THE WEIGHTS USED WERE INACCURATE, THIS APPARENTLY HAD NO EFFECT ON THE BID EVALUATION AND WE HAVE NO DOUBT THAT AN AWARD MADE TO ARLINGTON WOULD RESULT IN THE LOWEST OVERALL COST TO THE GOVERNMENT.'

THE STATUTE GOVERNING THIS PROCUREMENT REQUIRES THAT SPECIFICATIONS AND INVITATIONS PERMIT SUCH FULL AND FREE COMPETITION AS IS CONSISTENT WITH THE PROCUREMENT OF TYPES OF PROPERTY AND SERVICES NECESSARY TO MEET THE GOVERNMENT'S NEEDS, AND THAT THE AWARD OF A CONTRACT SHALL BE MADE TO THAT RESPONSIBLE BIDDER WHOSE BID, CONFORMING TO THE INVITATION FOR BIDS, WILL BE MOST ADVANTAGEOUS TO THE GOVERNMENT. 41 U.S.C. 253/A) AND (B). SECTION 253/B) ALSO PROVIDES THE AGENCIES WITH AUTHORITY TO REJECT ALL BIDS WHEN SUCH ACTION IS DETERMINED TO BE IN THE PUBLIC INTEREST. FEDERAL PROCUREMENT REGULATIONS (FPR) 1-2.404.1 ALSO RECOGNIZE THE AUTHORITY OF THE CONTRACTING OFFICER TO REJECT ALL BIDS AFTER OPENING AND PRIOR TO AWARD WHERE HE DETERMINES THERE IS A COMPELLING REASON TO DO SO. MOREOVER, BY PARAGRAPH 10/B) OF THE INVITATION THE GOVERNMENT EXPRESSLY RESERVED THE RIGHT TO REJECT ALL BIDS. IT IS THEREFORE CLEAR THAT THE QUESTION OF REJECTING ALL BIDS AND READVERTISING IS PRIMARILY A MATTER OF ADMINISTRATIVE DISCRETION.

SINCE THE RESPONSIBILITY FOR MAKING A DETERMINATION TO REJECT ALL BIDS RESTS WITH THE ADMINISTRATIVE OFFICERS OF THE PURCHASING AGENCY, IN THE ABSENCE OF CLEAR PROOF OF ABUSE OF THEIR DISCRETIONARY POWERS IN THIS REGARD, THIS OFFICE MAY NOT PROPERLY OBJECT TO SUCH ACTION. ALTHOUGH WE HAVE REPEATEDLY OBSERVED THAT THE REJECTION OF BIDS AFTER THEY ARE OPENED AND EACH BIDDER OR PROSPECTIVE BIDDER HAS LEARNED HIS COMPETITOR'S PRICES IS A SERIOUS MATTER AND SUCH ACTION SHOULD NOT BE TAKEN EXCEPT FOR COGENT REASONS, WHERE AN INVITATION PERMITS UNBALANCING OF BIDS AS A RESULT OF ERRONEOUS WEIGHT FACTORS AND IT IS DOUBTFUL WHETHER AN AWARD TO THE LOW BIDDER WILL RESULT IN THE LOWEST COST TO THE GOVERNMENT, WE BELIEVE THIS IS A COGENT REASON FOR REJECTING BIDS AND CANCELLING THE INVITATION.

IN VIEW OF THE ADMINISTRATIVE FINDINGS WITH RESPECT TO YOUR UNBALANCED BID AND THE ERRONEOUS WEIGHT FACTORS ON THE FIRST INVITATION, AS REPORTED ABOVE, WE BELIEVE THERE WAS A PROPER BASIS FOR THE DETERMINATION TO REJECT ALL BIDS AND CANCEL THE INVITATION.

ALTHOUGH THE ERRONEOUS WEIGHT FACTORS WERE NOT COMPLETELY CORRECTED IN THE SECOND INVITATION, THE ADMINISTRATIVE REPORT INDICATES THAT THE AWARD MADE TO RAY'S CARPET AND THE PROPOSED AWARD TO ARLINGTON WILL RESULT IN THE LOWEST OVERALL COST TO THE GOVERNMENT WHEN EVALUATED ON THE BASIS OF THE REVISED WEIGHT FACTORS. THAT BEING THE CASE, WE WOULD NOT BE JUSTIFIED IN OBJECTING TO THE AWARD OR TO THE PROPOSED AWARD.

EVEN THOUGH YOUR COMPANY DID NOT RECEIVE AN AWARD, YOUR PROTEST HAS AT LEAST FOCUSED ATTENTION ON THE NEED FOR MORE ACCURACY IN DRAFTING SPECIFICATIONS WHICH SHOULD RESULT IN THE NECESSARY ATTENTION TO THIS MATTER IN FUTURE PROCUREMENTS AND A BETTER BASIS FOR THE FULL AND FREE COMPETITION CONTEMPLATED BY THE STATUTES.